Beijing (AsiaNews/Bloomberg) Speaking at a briefing devoted to the upcoming International Finance Forum in China economist and Nobel Prize winner Robert Mundell said that "international pressure on China to revalue the yuan was unsuccessful [. . .] because despite repeated calls by the WTO and western powers for the yuan's appreciation it would have caused market instability." The Forum is sponsored by the United Nations and the Chinese government and is scheduled for mid-November in Langfang, Hebei province.
The US and other western governments have frequently urged China to revalue its currency arguing that its low exchange rate unfairly favours Chinese exports and foreign capital inflow.
Beijing has traditionally sidestepped the accusations of unfair trade practices by promising that its currency would "eventually move to a variable rate" but without setting a precise timetable and process.
In the briefing Mundell explained how China's monetary system would change, how it would relate to US dollar stability (whose exchange rate was fixed at US$ 1-8.277 yuans in 1995), and how it would form new ties with the euro.
"In Asia people are increasingly debating whether the continent should have its own monetary system," Mundell said. "The November conference will be one such place of discussion."
The Langfang forum will deal with general issues such as the growing place of China's economy in the global market place as well as address some precise questions such as bank and credit reform.
Mundell added that "in China loans to the private sector are small even tough it is responsible for the bulk of economic growth." For this reason he hopes that micro-credit practices will be implemented so as to finance small size businesses.(DS)